Ally Financial priced a $986.60 million auto lease securitization, adding to what has been a busy first quarter for this sector.
Ally Auto Receivables Trust 2015-SN1 is backed by closed-end new vehicle leases on primarily GM and Chrysler brand vehicles, according to a presale report published by Fitch Ratings. The pool consists of strong quality leases with a weighted average FICO score of 759, seasoning of 16 months, and a “reasonably diversified” maturity schedule, per Fitch.
Citibank is the lead underwriter.
The trust issued four classes of securities with triple-A ratings from both Fitch and Moody’s Investors Service. The $250 million class A2a notes with a weighted average life of 1.21 years pays 38 basis points over the Eurodollar synthetic forward curve; $230 million of A2b notes with the same average life pay one-month Libor plus 38 basis points; $250 million of class A3 notes with an average life of 1.75 years pay EDSF plus 46 basis points; and $74.6 million of class A4 notes with an average life of 2.02 years pays 55 basis points over the interpolated swaps curve.
The deal follows hard on the heels of a $1 billion offering from GM Financial, which priced last week, and another from Hyundai early in March. Volkswagen also tapped the market for more than $1 billion in February, while Mercedes Benz and BMW issued just over $3 billion, combined, in January.
Credit and residual losses on Ally’s portfolio have exhibited stable performance in recent years, according to Fitch. However the rating agency raised the same red flag about the potential for used car prices to rise as it has with other auto loan and lease securitizations. The wholesale vehicle market has been strong in recent years, but the large volume of cars coming off lease is expected to put downward pressure on prices sometime this year. That would limit the amount investors could recover when borrowers stop making payments.